Question
Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 15 percent. Selected financial information (in thousands of
Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 15 percent. Selected financial information (in thousands of dollars) for the first year of business follows: East West Sales revenue $ 2,200 $ 7,400 Income 800 1,110 Investment (beginning of year) 3,200 4,200 Current liabilities (beginning of year) 320 320 R&D expendituresa 1,100 1,000 aR&D is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: a-1. Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.) a-2. Which division had the better performance? multiple choice East West
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